WTO’s Panel Decision on Plain Packaging Tobacco: A New Direction to Developing Countries

Australia in 2011 introduced The Tobacco Plain Packaging Act 2011 (“the TPP Act”) to tackle the health problem related to the tobacco industry. This act bans logos and distinctively-colored cigarette packaging in favor of drab olive packets, with brand names printed in small standardized fonts. In response, plain packaging policy in Australia has faced multiple challenges from a global, well-resourced industry but the Australian Court upheld the tobacco plain packaging legislation. After that, this matter came before the WTO panel, where WTO judges had been tasked with delivering findings on whether plain packaging violates the TRIPS agreement or creates technical barriers to trade. WTO panel rejected this complaint, which was brought by Cuba, Indonesia, Honduras, and Dominican. The WTO panel said Australia’s law improved public health by reducing the use of tobacco products. It also rejected the argument that Australia had unjustifiably infringed tobacco trademarks and violated intellectual property rights.

Tobacco Industry Protest Against Abrasion of IP Brand Rights

The tobacco industry argued that plain packaging policy is infringing on their intellectual property rights. They claimed that Australia’s action in 2012 foisting plain packaging was violated their trademark rights and most of their arguments have relied on the contention that a registered trademark affords the owner a positive right to use that trademark. They also argued that this principle is found in international law, under the WTO Agreement on Trade-Related Aspect of Intellectual Property Rights (TRIPs) and also argued that the plain packaging amounts to expropriation, acquisition, or deprivation of their property rights in those trademarks. So they claimed that this policy was infringing their Intellectual property rights which are given under TRIPs.

 WTO’s Panel Decision

In the 884 pages report, the WTO panel dismissed the claims of tobacco companies that Australia’s plain packaging laws indefensibly infringe intellectual property protections and are unnecessarily trade barriers. The panel also found that these measures are not inconsistent with Australia’s obligations under the provision of WTO’s Agreement on Technical Barriers to Trade,(TBT Agreement) and the TRIP’s Agreement. The WTO panel also said Australia’s law improved public health by reducing the use of tobacco products, rebuffing claims that alternative measures would be equally effective. It further rejected the argument that Australia had unjustifiably infringed tobacco trademarks and violated intellectual property rights. So in this dispute WTO’s gave importance to public health rather than Intellectual property rights because no right is important than public health.

We also observed this interpretation in the UK High Court decision in relation to UK plain packaging regulations, where the court held:

“It is no part of international, EU or domestic common law on intellectual property that the legitimate function of a trademark (i.e its essence or substance) should be defined to include a right to use the mark to harm public health”.

And further in PMI v Uruguay investment arbitration claims, the tribunal stated:

“it is a right of use that exists vis-à-vis another person, an exclusive right but a relative one. It is not an absolute right to use that can be asserted against the state”. “The tribunal concludes that under Uruguayan law or international convention…. the trademark holder does not enjoy an absolute right of use, free of regulation”.

What does the WTO Decision on Plain Packaging means for Developing countries

The tobacco industry’s litigation strategy has been clear. As there are so many loopholes in our international laws due to which even their claims have little to no prospect of succeeding still they go for it. The recent decision on plain packaging law by WTO took six and a half years to decide even after the legislation was already enacted.  So such kind of litigation is very expansive and time-consuming to defend. These loopholes discourage governments to delay down such measures or even decide against legislating. Australia is one of the developed countries of the globe but in the case of developing countries, it is very difficult to defend such kind of expansive litigation. The tobacco industry has a very huge economic interest in the market by which it also has an influence on international organizations. So for a developing country, it is very difficult to raise its voice against them. This decision has major impacts for developing countries looking to battle the array of non-communicable diseases associated with smoking.

Kelly Henning, head of Bloomberg Philanthropies’ public health programs, considered the ruling an important fight against the tobacco industry.

“It sends a message to tobacco companies worldwide that they can and will be defeated, and it helps create a roadmap for other countries to implement plain packaging laws, a strategy that is proven to decrease the use of tobacco products,” she said. “Bloomberg Philanthropies applauds the WTO for its decision and will continue to champion efforts like this to implement proven tobacco control policies and help combat the global tobacco epidemic.”

The WTO report “flattens” another set of claims by the tobacco industry to challenge plain packaging and promotes other countries, especially developing countries, to progress with new anti-tobacco policies including plain packaging. I also believe it will build confidence in developing countries globally that the law has their back.

The McCabe Centre for Law and Cancer has conducted a workshop last month in Thailand to discuss this decision and also the Asia-Pacific Conference on Tobacco or Health is hosting a workshop in Melbourne in November to discuss the WTO decision and its implications, with developing countries in attendance. So the international and national organizations are taking initiatives for the developing countries to help them in formulating anti-tobacco policies.

Author: Prateek Tyagi, Intern at IP and Legal Filings, and can be reached at support@ipandlegalfilings.com.